Market Development Strategy

In market development, the company does not change its core product. Instead, it looks for new customers in new places or segments who might need the same offering. These new markets can be different regions, age groups, income levels, industries, or usage situations. The aim is to extend the life and reach of existing products.

• Uses existing products but targets new markets.
• Focuses on finding additional customer groups or locations.
• Requires adaptations in branding, communication, or distribution.
• Involves higher risk than simple penetration, but lower than diversification.
• Mostly driven by segmentation insights and geographic opportunities.
• Helps fully utilise product know-how and production capacity.
• Often supported by partnerships, new channels, or local intermediaries.

• Provides growth when the current market is saturated or slow.
• Spreads risk across multiple regions or customer segments.
• Allows the firm to reuse existing products and expertise in new places.
• Improves brand awareness beyond the original home market.
• Can create first-mover advantages in under-served markets.
• Helps extend product life cycle by tapping new demand pockets.

5.1 Target New Market Definition

Clear description of the new market: region, segment, industry, or usage situation, including its size and needs.

5.2 Market Research and Attractiveness Analysis

Study of demand, competition, regulations, culture, and customer behaviour in the new market.

5.3 Product–Market Fit Assessment

Evaluation of how well the existing product matches new market needs and what adaptations are required.

5.4 Entry Mode and Channel Strategy

Selection of how to enter—direct exporting, distributors, franchise, online channels, or own branch.

5.5 Positioning and Communication Plan

Deciding how to present the product and what messages will appeal in the new market context.

5.6 Pricing and Terms Strategy

Adjusting prices, margins, and payment terms to suit local purchasing power and competitive conditions.

5.7 Monitoring, Control, and Expansion Plan

Setting targets, tracking performance, and preparing to scale up if initial entry succeeds.

In the Ansoff Product–Market Growth Matrix, market development occupies the existing product – new market quadrant:

• Products: existing products or minor variants.
• Markets: new regions, segments, or applications.
• Risk: higher than penetration because customers and context are new.
• Objective: broaden reach by taking proven products to fresh markets.

1. Review current performance: Confirm that the product is proven in the existing market.
2. Identify possible new markets: Shortlist regions or segments with similar or emerging needs.
3. Conduct market research: Study demand, competition, culture, regulations, and access barriers.
4. Select target market(s): Choose those with attractive size, growth, and manageable risk.
5. Decide entry mode and channels: Choose between exporting, local partners, online, or own setup.
6. Adapt marketing mix: Adjust packaging, branding, pricing, and promotions for local preferences.
7. Plan logistics and support: Design supply, service, and after-sales arrangements.
8. Launch pilot entry: Start in limited areas or segments to learn before full roll-out.
9. Evaluate and expand: Track results, refine strategies, and then scale successful models.

Example: Market Development for a Successful Local Snack Brand

A snack company is popular in one city with a baked savoury product. Sales are stable, but city growth is limited. Management considers market development. They identify three nearby districts where similar tastes exist. Research shows rising demand in bus stands and college canteens. The firm chooses two districts for trial entry using local distributors. Packaging is adapted with language and price points suitable for smaller towns. Initial launches focus on high-traffic tea shops and transport hubs. Monthly reviews track sales, retailer feedback, and spoilage. After adjusting pack sizes and display material, the brand gradually expands to more outlets and districts.

Goal: Your product already sells reasonably well in one market, and you want to grow by entering new markets without changing the core product.

Step 1 – Confirm your core product is stable

Ensure product quality, cost structure, and brand identity are reliable before expanding.

Step 2 – Look for similar markets nearby

Identify locations or customer groups that resemble your current best customers.

Step 3 – Understand local differences

Visit new markets or talk to potential customers to learn about pricing, customs, and buying habits.

Step 4 – Choose a practical entry model

Decide whether to work through local dealers, franchisees, online platforms, or your own outlet.

Step 5 – Set clear entry targets

Define expected sales, number of outlets, or customer sign-ups for the first year.

Step 6 – Adapt only what is necessary

Keep your core product same but adjust pack size, language, or visuals to fit local context.

Step 7 – Support partners and channels

Provide training, point-of-sale material, and clear margins to local intermediaries.

Step 8 – Collect structured feedback

Ask distributors, retailers, and early customers about issues in awareness, pricing, or product fit.

Step 9 – Use learning to refine and expand

Fix problems quickly, then use the improved model to enter similar new markets step by step.

Example: Coaching Institute Entering Corporate Training Market

Step 1: A coaching institute has a strong record in exam training for graduates.

Step 2: Management notices that many past students now work in local companies.

Step 3: Discussions reveal a need for communication and presentation skills training at workplaces.

Step 4: The institute chooses a corporate market development strategy using in-company workshops.

Step 5: Targets are set for the number of corporate batches and participant counts.

Step 6: Existing content is adapted with corporate case examples and shorter session formats.

Step 7: A dedicated manager meets HR heads and coordinates schedules.

Step 8: Feedback from the first few clients is used to refine modules and evaluation formats.

Step 9: After successful pilots, the institute approaches more firms in similar industries.

• Generates growth without needing entirely new products.
• Spreads overheads and fixed costs across a larger customer base.
• Reduces dependence on a single market or region.
• Can create early-mover advantage in under-served territories.
• Strengthens the brand by increasing visibility across markets.
• Improves resilience against local downturns or regulation changes.

• New markets may not respond as expected, causing losses.
• Differences in culture, regulation, or infrastructure can create hidden costs.
• Management attention may be stretched between old and new markets.
• Local competitors may react strongly to a new entrant.
• Logistics and service challenges may damage brand reputation if not handled well.

Example 1: Regional Footwear Brand Entering Online Market Nationwide

A footwear brand is well known in one state through physical stores. Instead of immediately opening outlets in all states, it adopts an online market development strategy. It lists its existing product range on large e-commerce platforms and creates its own website. Product descriptions are rewritten in multiple languages and size guides are improved. Promotional campaigns target users in other states with similar climate and fashion preferences. Data on orders and returns from new states helps the brand decide where to eventually open physical stores.

Example 2: Dairy Cooperative Selling to Institutional Buyers

A dairy cooperative sells packaged milk mainly to households. To develop new markets, it starts offering the same milk and curd products in bulk packs to canteens, hostels, and restaurants. It designs larger containers, separate pricing slabs, and an early-morning delivery schedule. Institutional customers appreciate reliable supply and consistent quality. Without changing the core product, the cooperative opens up a new market segment, increasing total volume and stabilising demand.

Example 3: Software Firm Serving a New Industry Vertical

A software firm provides project management tools to engineering firms. It notices that interior design studios face similar scheduling and approval problems. Instead of building new software, the company modifies terminology, templates, and sample dashboards to suit design studios. Sales teams attend design exhibitions and partner with design associations. By targeting this new vertical, the firm extends its existing tool into a fresh market, generating additional recurring revenue.

Example 4: Educational Toy Maker Entering Export Markets

A small manufacturer of educational toys sells primarily in domestic metro cities. Based on enquiries from other countries, it explores export-based market development. Packaging is adjusted to meet safety and labelling norms of target countries. The company joins international trade fairs and appoints overseas distributors. It initially ships small batches and closely tracks exchange rates, freight costs, and demand. Over time, exports become a major contributor to revenue while the domestic market continues.

Example 5: Fitness Centre Targeting Senior Citizens

A fitness centre mostly caters to young adults. Observing local demographics, management realises that senior citizens in nearby housing complexes have limited guided exercise options. The centre creates “gentle fitness” batches at non-peak hours using the same facility and equipment, but with slower routines and medical guidance. Communication emphasises joint flexibility and balance rather than body-building. This new age segment becomes an important additional market for the same core service.

1. Market development strategy mainly means:
   a) New products in new markets
   b) Existing products in new markets
   c) New products in existing markets
   d) Reducing product range
   Answer: b
2. Which of the following is an example of market development?
   a) Increasing usage among current buyers in the same city
   b) Launching a completely unrelated product line
   c) Selling the same product in another state through distributors
   d) Reducing price to clear existing stock
   Answer: c
3. In the Ansoff Matrix, market development involves:
   a) Highest risk among all strategies
   b) Diversification into unrelated businesses
   c) Existing products and new markets
   d) Only cost reduction without growth
   Answer: c

• Market development strategy uses existing products to enter new markets, regions, or segments.
• It is suitable when the present market is saturated or when attractive new markets are available.
• Key decisions include target market selection, entry mode, channel design, and level of adaptation.
• It involves more risk than penetration but less than diversification.
• Successful market development requires good research, careful pilots, and strong local partnerships.

1. Define market development strategy. Explain its place in the Ansoff Product–Market Growth Matrix.
2. Discuss the main components of a market development strategy with suitable examples.
3. Describe the steps involved in formulating a market development strategy for a consumer goods firm.
4. Explain different types of market development (geographic, segment-based, channel-based, usage-based).
5. Differentiate between market development strategy and penetration strategy using a comparison table.

Students can use the definitions, tables, and real-life examples above to write short notes, long answers, and case study solutions on market development strategy.